Who's mining Bitcoins?

By R3DP3NGUIN
Jan 22, 2013
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  1. Whats happening TechSpot peeps.

    I'm curious to know if many people here are into Bitcoin mining. If so, what rigs you got, and if you have actually manged to make some coin.
  2. Kunming

    Kunming Newcomer, in training Posts: 43

    I'm setting it up ^^.
    It's really a fascinating thing.

    For the uninitiated: https://www.weusecoins.com/
    A link to a video and site, that explains Bitcoin.
  3. St1ckM4n

    St1ckM4n TechSpot Evangelist Posts: 3,386   +608

    Is it pretty much giving you 'credit' for helping to decrypt some passwords and stuff?
  4. bobcat

    bobcat TechSpot Paladin Posts: 688   +67

    An interesting subject. I've always had the impression that you do a lot of work for little reward. Is this so? And where does the money come from?
  5. Kunming

    Kunming Newcomer, in training Posts: 43

    Bitcoins are really interesting guys.

    You do get a kind of reward for solving cryptographic blocks, using
    your computers hardware. Naturally this lends itself to the fact that if you
    have a good computer, you'll be able to do this solving whole lot faster.
    So yes, you yourself don't have to do much per say, except install a few
    programs (Your Bitcoin wallet and a GUI "miner" program). While mining, you
    won't be able to engage much in things like gaming, if it's a demanding game.
    But you can leave your computer running over night for example.

    Bitcoins are really cool because you can buy REAL things with them. You can also
    convert them back into real cash. Many sites already do accept Bitcoins, such as
    Amazon.
  6. davislane1

    davislane1 TechSpot Guru Posts: 1,199   +449

    According to the research I've done, it's a matter of profit margin. The "mining" process eats up power and requires higher-end hardware (so, minor electricity costs and $800-$1200+ for an appropriate rig), which translates to a significant amount of any bitcoin profits going to cover basic operating and equipment costs. Moreover, unless you have a properly setup rig, any bitcoins you receive probably won't even cover the cost of keeping the computer on.

    As for where the money comes from... Apparently, they can be exchanged for currency on applicable exchanges or used to purchase goods from retailers that accept the virtual currency. Effectively, it works like any other commodity: you have something of relative scarcity, the market decides what it's worth, and you can sell or purchase it at that price, or trade it for something of equivalent value.

    Feel free to correct me if my understanding of bitcoins is faulty.
  7. Kunming

    Kunming Newcomer, in training Posts: 43

    I'd say anyone can engage in the mining. So it's not because you need a high end rig. The thing is, that
    you'll be able to mine faster, with a good rig. There's even specific graphics card used for mining, because they're
    especially good and graphics cards are superior in terms of how fast you can mine. However my memory is
    vague so I can't produce any names. It was something a friend showed me.

    Bitcoins are interesting as an experiment, as they're more safe than normal currency, in various ways.
  8. davislane1

    davislane1 TechSpot Guru Posts: 1,199   +449

    This is why I say that you need an appropriate rig. If your computer isn't up to proper spec, the process of mining is financially pointless. For instance, a rough equation for estimating revenues might look like this (BV = Bitcoin Value):

    (BV x Units)(Frequency) - (Rig Cost + Electricity Cost) = Profit

    Even if you don't build a new machine (thus eliminating rig costs), the frequency at which you generate bitcoins will likely be so low relative to units that you won't be able to cover the electricity expense.

    Although you might collect a fraction of a bitcoin (or even a full bitcoin) from time to time on an ordinary machine, the electricity costs of running the computer will completely outstrip anything you're likely to make (statistically speaking) from engaging in mining. Allegedly, GPU mining was implemented (in part) to solve this problem. However, cards that will give you a reasonable boost in mining "output" are going to run several hundred dollars or more, bringing us right back to square one.
  9. Ranger12

    Ranger12 TechSpot Guru Posts: 630   +116

    I spent some time trying to wrap my head around how bitcoins work. I haven't been very successful but it is very interesting. I am interested in trying just to get a better understanding of it. There doesn't seem to be any risk involved (hence the low return). It also makes me wonder whether there is a market for hardware designed specifically for a task like bit coin mining.
  10. davislane1

    davislane1 TechSpot Guru Posts: 1,199   +449

    Hardware: http://www.butterflylabs.com/

    Risk: Changes in bitcoin value. There is a theoretical limit to the number of total bitcoins that will be generated (something like 21 million or so), but the real value of those coins is subject to change as a result of supply and demand.
  11. Ranger12

    Ranger12 TechSpot Guru Posts: 630   +116

    Also something that I find even more interesting would be bit coin speculation. Just like with any other currency exchange speculation would possible. Say I believe the exchange rate for bit coins to dollars will increase, I would buy up bit coins then sit on them until the exchange rate went up then exchange them at the new rate. Obviously, it's very risky but the reward is also greater, assuming you speculate right ;)
    davislane1 likes this.
     
  12. cliffordcooley

    cliffordcooley TechSpot Paladin Posts: 5,775   +1,429

  13. davislane1

    davislane1 TechSpot Guru Posts: 1,199   +449

    Great article. I see I was a little bit off in my analysis, but the general idea was right: it's simply not worth while unless you're willing to lay down some serious coin upfront (no pun intended).
  14. Kunming

    Kunming Newcomer, in training Posts: 43

    Doing such a thing would be very very risky I think, because Bitcoin isn't so
    stable. Sudden fluctuations do happen. But hey if you want to store your Bitcoins,
    the best way to do that, ironically, is to print them out on at least 2 pieces of paper
    and store them at safe places.
  15. St1ckM4n

    St1ckM4n TechSpot Evangelist Posts: 3,386   +608

    Yeah, but is this just a pure exchange of coins for your time? I'm sure that whoever distributes the actual bitcoins gets something out of this (apart from a cut).
  16. bobcat

    bobcat TechSpot Paladin Posts: 688   +67

    Much has been clarified as regards what is involved and what gains, if any, can be expected.

    But my second question above remains unanswered. Namely, where does the generated bitcoin money come from? In other words, who pays for it and why would anybody stand to gain from you using your computer for mining so that he'll pay for it?
  17. cliffordcooley

    cliffordcooley TechSpot Paladin Posts: 5,775   +1,429

    My guess would be it's a form of digital stock market. Which is why the value(basically your computers performance) of a Bitcoin changes. People who invest and actually pay for Bitcoins is where I see real value assignment. I too am curious as to who actually invest in this project, whether it be an investment or otherwise.
  18. Ranger12

    Ranger12 TechSpot Guru Posts: 630   +116

    I was talking to a friend about his experience with bit coins. Turns out he knew a couple people who use bit coins to purchase drugs.
    http://www.forbes.com/sites/andygre...ng-22-million-in-annual-mostly-illegal-sales/
    It seems the secure and largely anonymous nature of bit coins makes it an attractive means of payment.
    As for why bit coins have value. The market assigns value to any given currency. The market being made up of buyers and sellers. If you think of Fallout where the currency is bottle caps you can see that something that is traditionally worthless now has value because buyers and sellers assign value to it because it facilitates the flow of goods.
    As far as I can tell bitcoins are just being created each day. What keeps inflation of bitcoins down is that the market volume increases as well as the difficulty of mining new coins.
  19. Burty117

    Burty117 TechSpot Chancellor Posts: 2,473   +301

    I've just started mining bitcoins! however, it isn't going so well :(
  20. captaincranky

    captaincranky TechSpot Addict Posts: 10,409   +835

    And you thought it was supposed to....um.............er......, exactly why then...?:oops:
  21. Burty117

    Burty117 TechSpot Chancellor Posts: 2,473   +301

    Well I was hoping having a fairly decent rig (Intel 4770K, 8GB RAM, Nvidia GTX 780) I could mine some coins to spend, set it all up and I'm just hitting 292 Mhash/s which from what I can see is very low :( a single ATI card such as the 7970GHz edition on its own beats my score by almost quadruple, unless I'm doing something wrong?
  22. captaincranky

    captaincranky TechSpot Addict Posts: 10,409   +835

    Here's some basic math, "C" minus "Z" equals "C"!:eek:

    Where "C" equals cost of computer, and "Z" equals value of Bitcoins mined...

    Actually the answer is "equals" "C +E". Where "E" equals the electric bill.

    Yeah, yeah, yeah, I know I'm dense. Nobody has, thus far, been able to satisfactorily explain why Bitcoins should have value.

    I'll worry more about it when the government tries to pay my pension checks with them. Until then........meh.
    Burty117 likes this.
  23. Raoul Duke

    Raoul Duke TechSpot Enthusiast Posts: 301   +81

    Not interested. I think that for those who are, it is already too late for an individual with a rig to make his money back on the rig much less make a profit
  24. GhostRyder

    GhostRyder TechSpot Evangelist Posts: 2,139   +498

    Well AMD cards tend to be better at mining, however you probably don't have the correct setup on yours. There are different numbers and rates that will probably double or triple your rates if you check along with better software's including things like Cuda miner.
  25. captaincranky

    captaincranky TechSpot Addict Posts: 10,409   +835

    This is where the adage, "nothing ventured, nothing gained", rears its ugly head, and comes into play.

    Speaking from experience, pornography can be "mined", using the most basic of IGP graphics.

    Since I'm far too cheap, and far too lazy, to spring for an extravagant, high powered video card, then go through the trouble of installing it, I guess I'll always be, "porn rich, and Bitcoin poor".........:oops:
    Archean likes this.


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